When a business raises prices and sees record profits, but no drop in sales, they have no incentive to reduce prices. What a healthy meal, by the way!
I saw a pleading online asking why fast-food prices have gotten so ridiculous lately. "A value meal costs over $10 with tax! Why is this?"
Short answer: Because you keep buying it.
I noted before there is a hysteresis in the consumer marketplace. You raise prices and people keep buying, as they figure the price bump is temporary and while they grouse about it, they think they can afford it. They'll just cut corners somewhere else in their life - maybe discount dentistry or something. Of course, what they actually do is increase their credit card debt, which is happening right now, nationwide, as personal debt load is at all-time highs and savings rates at all-time lows (and credit card losses skyrocket as well!). We rob Peter to pay Paul - or in this case, to pay Ronald McDonald.
Until consumers stop consuming and seek alternatives, prices will remain high and keep going up. And there are plenty of alternatives. You can buy a cheaper item on the "value" menu, and bring your own beverage (water) instead of paying $2.58 for a high-fructose diabetes nightmare. Or, you could go to a grocery store and buy food and learn how to cook. This latter option is alien to a growing number of Americans who literally cannot feed themselves but instead rely on fast-food and fast-casual restaurants for almost 100% of their caloric intake. And I am not kidding about this - for some reason, a whole generation was raised without knowing how to even microwave a hot-pocket.
I read another missive, "I paid $6 for this bag of potato chips! This an outrage!" Don't buy them, then. If you did, and others did just that, the price would come down - supply and demand. When you pay $6, you are saying this is a fair bargain, despite all your bitching to the contrary. Or put it another way, money talks, bullshit walks. Put your money where your mouth is (quite literally).
No one "needs" snack foods, and indeed, in a nation of morbidly obese people, maybe high food prices are a godsend. Or maybe not. We stopped for gas the other day, and Mark noticed that the car at the pump across from us had a 30-something 400-lb man in it (he never got out of the car). His wife or girlfriend or mother (hard to tell which) bought him a large Snickers bar, which he put in his mouth in one bite. Like some sort of sword-swallowing trick! We were appalled. But that's America, these days.
The food companies are not going to lower prices because you grouse about them. "Oh boy, Clem Kadiddlehopper in Bumfuck, Oklahoma is complaining about the price of the bag of chili-cheese flavored Doritos he bought! We'd better lower prices right away before he complains more!
That, of course, is never going to happen. And sadly, this is the end result of Karenism - the idea that if we complain enough and "ask to see the manager" we will get our own way. If only we answer an online survey or a Facebook opinion poll (always the pulse of America!) the powers-that-be will listen to our voices and change things for the better.
The reality is, your only opinions that matter are your money and your vote - the latter at a polling booth, not some stupid online survey. When Clem stops buying chili-flavored Doritos, the company that makes them will notice - particularly when all of Clem's friends stop buying, too. And sadly, that isn't likely to happen until Clem runs out of money and available credit on his credit card. The grocery store is now operating under casino rules. Once you run out of money, they toss you out.
So change will come - faster than we think it will. Housing is starting to cool off and may collapse. Unemployment hasn't risen much - yet - but the idea that you can dictate your salary to your employer is already past its sell-by date. Sadly, if the shit hits the fan in 2024, it will pave the way for you-know-who to get elected. And no doubt, some in the GOP will try to sabotage the economy to make sure this happens. Government shutdown, anyone?
There are alternatives to spending money on potato chips and fast food. For less than the cost of a "value meal" item at McDonalds, we each had shrimp and corn chowder (Walmart Deli - $3.87) and corn bread last night (from a box of mix - 99 cents). Rather than buying potato chips, I bought a bag of unpopped popcorn and popped it a few times this summer - one bag lasted us months.
There are alternatives, even when people think there are not alternatives - for food, housing, transportation, or even health care. People seek out alternatives when prices go higher and they cannot afford to pay.
But when they do pay higher prices, well, then they can afford to pay - or at least that is the message they are sending to the merchant, who will keep raising prices until they stop buying.
It''s Economics 101, folks!
